Labelling helium gas cylinders alone was not manufacture under the deeming provision; excise duty and penalties failed.

Affixing an assessee's own label and particulars on helium gas cylinders received already filled by another manufacturer did not amount to manufacture under Note 10 of Chapter 28. The deeming provision for manufacture, covering labelling, re-labelling, repacking from bulk to retail packs, or other treatment to make goods marketable, must be applied strictly. On the facts, the activity was limited to receiving filled cylinders, testing the gas and adding the assessee's name and particulars; it was not shown to involve repacking or any statutory treatment rendering the product marketable. The duty demand and penalties were therefore not sustainable.

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Issues: Whether affixing the assessee's own label and particulars on cylinders containing Helium gas, after the gas had been filled by another manufacturer, amounted to manufacture under Note 10 of Chapter 28 and attracted central excise duty and penalty.

Analysis: Note 10 treats labelling or re-labelling of containers, repacking from bulk packs to retail packs, or any other treatment to render the product marketable to the consumer as manufacture. The provision creates a legal fiction and therefore must be applied strictly. The activity in question consisted of receiving filled cylinders, testing the gas and affixing the assessee's own name and particulars. On the facts, there was no repacking from bulk packs to retail packs in the sense contemplated by the note, nor was there any treatment shown to render the product marketable to the consumer. The Tribunal followed its earlier view that mere filling of smaller containers and subsequent affixing of labels, without the statutory ingredients being satisfied, does not fall within the deeming provision. The Department's reliance on labelling was not accepted because the statutory conditions for manufacture were not established.

Conclusion: The activity did not amount to manufacture under Note 10 of Chapter 28, and the duty demand and penalties were not sustainable.

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